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The Thursday Market Minute

  • Global stocks stalled as investors remain defensive in the face of uncertain U.S.-China trade talks and further signals of a slowing world economy.
  • Japan's manufacturing export orders fall to a two-and-a-half year low in January, while South Korean chipmaker SK Hynix echoes semiconductor concerns over slowing growth and swelling inventories.
  • Global crude trades lower as as investors pare bets on potential China stimulus to kick-start demand in the world's biggest energy importer and react to a surprise 6.6 million barrel build in domestic U.S. crude stocks.
  • U.S. equity futures suggest a mixed open on Wall Street ahead of earnings from Starbucks, Bristol-Myers Squibb, American Airlines, Western Digital and Intel.

Market Snapshot

Global stocks stalled Thursday, with investors largely retreating to defensive positions amid ongoing concerns over the strength of the world economy, the fate of U.S.-China trade talks and the potential for a change in tack from key central banks.

A lack of overnight headlines to drive those narratives in either direction kept markets at bay during Asia trade, and teed-up both European stocks and Wall Street for indecisive starts as focus shifts to the U.S. corporate earnings season and the economic impact of this prolonged government shutdown.

That said, data from Japan's powerful manufacturing export sector showed new orders falling to a two-and-a-half year low, while South Korea-based chipmaker SK Hynix Inc. echoed its major sector peers in cautioning on weak first quarter revenues, each confirming the impact of China's broader economic slowdown and the impact of its still-unresolved trade dispute with China.

President Donald Trump told reporters in Washington Wednesday that "I like where we are right now", in terms of trade talks, which are set to resume next week, adding that  China "very much wants to make a deal. We'll see what happens. But we're doing very well in our negotiations with China." 

Early indications from U.S. equity futures suggest a mixed session on Wall Street, with contracts tied to the Dow Jones Industrial Average indicating a 28 point gain while those linked to the S&P 500 guiding to a 3.4 point bump high. Nasdaq Composite futures, however, suggest a stronger 25-point gain for the tech-focused benchmark thanks to a global rebound in chipmaking stocks following a series of better-than-expected earnings and outlooks last night from Texas Instruments (TXN , Xilinx Inc. (XLNX and Lam Reserach (LRCX

Earnings on tap for the Thursday session include Starbucks (SBUX , American Airlines (AAL , Western Digital (WDC , Bristol-Myers Squibb (BMY and Intel (INTC

European stocks added to gains Thursday, following a relatively tepid session in Asia, with the Stoxx 600 rising 0.35% and Britain's FTSE 100 slipping 0.06% as the pound held at an 11-week high of 1.3057 against the U.S. dollar.

The European Central Bank meets later today in Frankfurt, and while no change is anticipated in any of its three key policy rates, investors are looking for any suggestion that a slowing European economy, which the International Monetary Fund flagged as a key global risk earlier this week, will lead to a change in tack from President Mario Draghi.

Draghi, who is set to retire after eight years at the helm in Frankfurt later this fall, has indicated that he and his colleagues on the Governing Council -- the equivalent to the Federal Reserve's Open Markets Committee -- would like to start 'normalizing' interest rates by late summer.

However, Draghi told lawmakers in the European Parliament in Strasbourg last week that "a significant amount of monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term," a view that was reflected in the International Monetary Fund's recent downgrade of the global economy.

The euro has fallen around 1.6% against the U.S. dollar since Draghi's comments in Strasbourg, as investors pare bets on the ECB's ambition to lift at least one of its interest rates later this year, with the decline accelerated by the weakest German economic growth in a least five years.

In Asia, the MSCI Asia ex-Japan index, the region's broadest measure of share prices, bumped 0.32% higher heading into the close of the session, while Japan's Nikkei 225 in closed 0.09% lower in Tokyo at 20,574.63 points.

Global oil prices, which have dictated the direction of U.S. markets for several weeks, drifted lower again Thursday thanks in part to the broader investor concern over end-demand for crude in a slowing global economy and data from the U.S. Energy Information Administration Wednesday which showed domestic stockpiles rose by a larger-than-expected 6.6 million barrels last week.

Brent crude contracts for March delivery, the global benchmark, were marked 6 cents lower from their Wednesday close in New York and changing hands at $61.17 per barrel while WTI contracts for the same month were little-changed at $52.68 per barrel.